sp'weekly2, rainbow
Summary
The very simple 'rainbow' (Elder Impulse) weekly chart pretty much sums up the current situation.
We've seen 5 little waves from the November low - forming one very significant larger wave. The only issue is whether we see a brief spike into the sp'1570s..before this wave is conclusively done.
Bears should be seeking a weekly close under the 10MA of sp'1523, but that looks somewhat difficult. Bulls really only need to close tomorrow in the 1550s, and that would easily allows for a spike top in the 1570s early next week.
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USO, weekly, 2yr
In addition to closely watching Copper, I am even more closely watching WTIC Oil - via the ETF USO.
The break levels are absolutely clear. Bulls need >35...bears need <32.
It makes for an easy 'chase it' higher/lower situation, and stop levels are also very straight forward with the current price action.
Considering the QE-Pomo action is continuing, I'm more inclined (if reluctantly) to assume that Oil will break to the upside. However, Dr Copper - equally important, has this week broken to the downside!
I'll most definitely keep referring back to Oil and Copper in the weeks and months ahead. They could be key to discerning whether the equity market is going to get smashed later this year.
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*I am long USO, seeking an exit before the weekend, in the 33.50s.
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Looking ahead...
There is no US econ data due this Friday, which itself will probably be filled with more Cypriot news updates. We could see some real choppy action across the day. The daily charts are suggestive of 'weakness' into the weekend, although the hourly charts are already moderately oversold. Those bulls who are heavy long right now, should have good stops, somewhere in the sp'1540/30s.
As I always tend to say...how we close the week..will be important!
Goodnight from London